NCPA - National Center for Policy Analysis

More Disincentives to Work under ObamaCare

August 2, 2013

Be careful you don't fall off the ObamaCare "cliff" when the boss asks you to put in some overtime. Working more could ultimately mean thousands of dollars less for you under a quirk in the new health care law going into effect this fall. This could prompt some people to cut back on their hours to avoid losing money, says CNBC.

"Working more can actually leave you worse off," the price-comparison site notes in a new analysis. In that scenario, an individual or family whose annual income surpasses maximums set by the federal government (if only by $1) will totally lose subsidies available to buy health insurance under the Affordable Care Act (ACA).

The loss of those subsidies in some cases will mean that people potentially would have been better off financially if they had worked less during the year, and they then would have to work significantly more to make up for the lost subsidy.

  • Under the ACA, federal subsidies in the form of tax credits to buy insurance on new state health insurance exchanges will be available to millions of people who can start enrolling on those exchanges Oct. 1.
  • The subsidies are available to people or families whose incomes total 400 percent above the federal poverty level or less, and are designed to cap their insurance premiums at 9.5 percent of their total income.

Under a scenario that identified, a couple in Ohio, both age 50, would be eligible for subsidies worth $3,452 to purchase a so-called silver insurance plan (a moderately priced level of benefits under the ACA's scheme) that costs $9,346 annually if they made up to $62,040 per year. But if they made just $1 more than that, they would lose the subsidy.

Source: Dan Mangan, "Look Out Below! Work More, Get Less in ObamaCare 'Cliff'," CNBC, July 30, 2013.


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